Market Recap - February 2024

Jeff McClenning |

Election-year shenanigans


Investors disregarded disappointing inflation numbers last month and talk of fewer rate reductions this year. Instead, they remained fixated on robust business earnings and rising enthusiasm for AI, or artificial intelligence.


As the table illustrates, U.S. stocks are off to a good start this year.

Key Index Returns




Dow Jones Industrial Average



Nasdaq Composite



S&P 500 Index



Russell 2000 Index



MSCI World ex-U.S.A**



MSCI Emerging Markets**



Bloomberg U.S. Agg Total Return



Source: Wall Street Journal,, Bloomberg, MarketWatch
MTD returns: January 31, 2024–February 29, 2024
YTD returns: December 29, 2023–Febraury 29, 2024
**in U.S. dollars

During a presidential election year, investors often wonder about the impact on the market.  Well, stocks usually appreciate during presidential election years, but an annual gain is not unusual. Historically speaking, broad-based market indexes have a long-term upward bias.  So, let’s review the data for any discernable trends.

Since 1928, the S&P 500 Index has averaged an annual increase of 11% (dividends reinvested). The index finished the calendar year higher 73% of the time, according to data provided by the NYU School of Business.


Table 2: Presidential election year performance


S&P 500 Index annual average since 1928

Presidential election year since 1928

The incumbent* runs for re-election since 1928

Average rise in the S&P 500 Index




The S&P 500 Index rose:

73% of the time

83% of the time

93% of the time

Data Source: NYU Stern School of Business Historical Returns on Stocks, Bonds and T-Bills
The S&P 500 is an unmanaged index that cannot be invested into directly.
*1940 and 1944, when FDR sought a third and fourth term, are not included.
The modern S&P 500 Index was first launched in 1957. Performance back to 1928 incorporates the performance of the predecessor index, the S&P 90. Data includes dividends reinvested.
Past performance is no guarantee of future results.

During a presidential election year, the S&P 500 index also advanced an average of 11%. That is to say that a presidential election appeared to have no influence on stocks. Election or no election, the S&P 500 averaged 11%; end of story, right?

Let’s take it one step further and review returns when the incumbent was running for re-election.  When the incumbent sought a second term, the S&P 500 averaged an advance of 15% and finished the year in positive territory 93% of the time.  The return not only exceeded the longer-term average, but the 93% “win rate” topped the presidential “win rate” of 83% and the longer-term “win rate” of 73%.

Of course, there’s no guarantee stocks will follow the historical pattern. Exercises such as these make for fascinating conversation but not much more, in our view.

Today’s climate

Today's political environment is filled with acrimony and bitterness, but we caution against making investment decisions tied to political headlines. It’s common to hear pundits proclaim that this election is “the most important in our lifetime.” But that has more to do with hype and voter turnout.

Unquestionably, the winner will help set the course for the nation. However, investors view market performance through a very narrow lens.  Year after year, the economic fundamentals have fueled gains or losses in equities. Interest rates, economic activity, corporate profits, and inflation are the variables that have historically influenced market sentiment, not elections or the party that wins.

Investing wisdom from the professor

As legendary investor and the chairman of Berkshire Hathaway, Warren Buffett pointed out in his annual letter to shareholders last month:

“Occasionally, markets and/or the economy will cause stocks and bonds of some large and fundamentally good businesses to be strikingly mispriced. Indeed, markets can—and will—unpredictably seize up or even vanish as they did for four months in 1914 and for a few days in 2001,” he said.  “If you believe that American investors are now more stable than in the past, think back to September 2008. Speed of communication and the wonders of technology facilitate instant worldwide paralysis, and we have come a long way since smoke signals. Such instant panics won’t happen often—but they will happen.”

But, as Buffett opined, “Thanks to the American tailwind and the power of compound interest, the arena in which we operate has been—and will be—rewarding if you make a couple of good decisions during a lifetime and avoid serious mistakes.”  We’ll sum up our letter to you with this final remark from him. “It’s harder than you would think to predict which (businesses) will be the winners and losers. And those who tell you they know the answer are usually either self-delusional or snake-oil salesmen.”

That’s one reason why we stress the importance of diversification, not the political headline of the month. It allows us to participate in the “American tailwind.”

I trust you have found this review to be informative. If you have any inquiries or wish to discuss other matters, please don’t hesitate to contact me or any team member.